When you need money quickly and banks aren’t an option, it’s tempting to turn to lenders who promise fast cash delivered right to your door. But before you sign anything, it’s worth understanding exactly what you’re agreeing to and why there are much better alternatives available.
What doorstep loans actually cost
Doorstep loans might seem convenient, but they’re one of the most expensive ways to borrow money legally. We’re talking about interest rates that can reach 1557.7% APR compared to our maximum of 42.6% APR. That means a loan that should cost you manageable monthly payments ends up costing many times more than you originally borrowed.
The way these loans work seems straightforward enough – someone comes to your house, processes your application on the spot, and delivers cash. Then they come back every week to collect payments. But this convenience comes with a price that can trap families in debt for years.
Here’s what the numbers actually look like. If you borrow £1,000 and pay it back over 12 months:
- With London Mutual: £1,205 total (you pay back £205 in interest)
- With Provident: £1,872 total (you pay back £872 in interest)
- With Satsuma: £1,992 total (you pay back £992 in interest)
The difference isn’t just significant – it’s life-changing money that could be spent on your family instead of lining the pockets of expensive lenders.
When doorstep lenders become loan sharks
Legal doorstep lenders should be registered with the Financial Conduct Authority. If they’re not, they’re operating illegally as loan sharks. But even legal doorstep lending shares uncomfortable similarities with illegal lending: extremely high costs, weekly pressure to pay, and business models that profit from keeping people in debt.
Loan sharks take this much further. They operate completely outside the law, which means:
- No paperwork showing what you actually owe or have repaid
- Interest rates and charges that can change at any time
- Risk of intimidation, threats, or violence if you struggle to pay
- No legal protections if things go wrong
The scary thing about loan sharks is that they don’t always look like criminals. They might be someone from your local community, a regular at the pub, or even a colleague who offers to help out with a short-term loan. They start friendly and helpful, but once you’re in their debt, the relationship changes dramatically.
Why people get trapped
Both doorstep loans and loan sharks target the same vulnerability: people who need money quickly but can’t access mainstream credit. Maybe you’ve had financial problems in the past, maybe you’re on benefits, or maybe you just don’t have the kind of employment that banks understand.
When you’re desperate, it’s easy to focus on getting the immediate problem solved without thinking through the long-term consequences. A weekly payment of £25 doesn’t sound terrible until you realise you’ll be paying it for years and the total amount keeps growing.
The weekly collection system also creates psychological pressure. When someone shows up at your door every week expecting money, it becomes very difficult to explain that you can’t afford the payment. This pressure can push people to borrow from other expensive sources just to keep up with existing payments.
A genuinely better alternative
Credit unions exist specifically to provide affordable lending to people who’ve been excluded from mainstream financial services. We’re not trying to maximise profit from people in difficult situations – we’re trying to help our members build financial stability.
The practical differences matter:
- Fair interest rates: Our maximum APR is 42.6%, which is a fraction of what doorstep lenders charge. This means your loan gets smaller with each payment instead of growing larger.
- Flexible repayments: We work with you to set up repayments that fit your budget, whether that’s weekly, monthly, or something else that works for your situation.
- Build your credit: We report successful repayments to credit agencies, which helps improve your credit score over time instead of damaging it further.
- No early repayment penalties: If you can afford to pay off your loan early, you’ll save money on interest rather than facing penalties.
- Consumer protections: As an FCA-regulated lender, you have legal rights and protections that don’t exist with illegal lenders.
What you can use credit union loans for
Unlike some lenders who restrict how you use borrowed money, credit union loans can help with almost anything that matters to your family:
- Emergency expenses: Broken boilers, car repairs, or unexpected medical costs don’t have to become financial catastrophes.
- Home improvements: Whether it’s essential repairs or making your home more comfortable, spreading the cost makes projects affordable.
- Debt consolidation: Replace expensive credit card debt or multiple high-cost loans with one manageable monthly payment.
- Building opportunities: Car loans to get to work, visa fees to secure your future, or education costs that improve your prospects.
- Family occasions: Christmas, birthdays, or family emergencies shouldn’t force you into debt cycles that last for years.
Breaking free from expensive debt
If you’re already trapped in expensive lending arrangements, you don’t have to stay there. Credit union consolidation loans can replace multiple high-cost debts with one affordable payment, potentially saving you hundreds or thousands of pounds in interest.
Many of our members have used consolidation loans to escape cycles of borrowing from payday lenders, doorstep lenders, or even loan sharks. The relief of having manageable payments and knowing exactly when your debt will be paid off is transformational for most families.
Making the switch
The process of joining a credit union and applying for a loan is straightforward, though it might take slightly longer than doorstep lending. We need time to understand your financial situation and ensure that any loan we offer is genuinely affordable for you.
This isn’t about making lending more difficult – it’s about making sure that borrowing actually helps your situation rather than making it worse. We’d rather decline a loan application than trap someone in debt they can’t afford.
The members who’ve made the switch from expensive lending consistently tell us the same thing: they wish they’d discovered credit unions sooner. The combination of fair rates, genuine customer service, and financial products designed to help rather than exploit makes all the difference.
When you need to borrow money, you deserve access to lenders who are genuinely trying to help you succeed rather than profit from your difficulties. That’s what credit unions are for, and that’s why the difference in cost isn’t just about money – it’s about dignity, respect, and building a more secure financial future for your family.
